Finance and Economic Development Minister, Mthuli Ncube has assured the nation that the government is making efforts to clear external debt and arrears as a re-engagement strategy to pave way for external funding.
Presenting the 2021 mid-term budget and review to Parliament in Harare, the finance minister said the country was finding it difficult to secure external funding since it was failing to meet the preconditions set by funding partners to access finances.
“Access to external financing remains constrained, due to debt arrears, therefore, domestic financial markets remains the major source of budget financing.”
“As at December 2020, total Public and Publicly Guaranteed external debt including RBZ external guaranteed debt amounted to US$10.5 billion, represent 71.2% of the GDP. External debt alone makes up over US$ 6.5 billion.”
Mthuli further pronounced that the treasury department had resumed quarterly token payments to the multilateral Development Banks, the World Bank Group, the African Development Bank Group and the European Investment Bank as part of the re-engagement process with the international community.
“Token payments are part of the re-engagement process with the International Community in line with the Arrears Clearance and Debt Relief Strategy which is critical in regaining access to concessional financing from both multilateral and bilateral development partners. Payment to Paris Club Creditors will also begin in the second half of 2021.”
“We want Zimbabwe to be known as a good debtor and not a bad debtor.”
During the first half of the year, Zimbabwe has received US$273.4 million from bilateral development partners across all sectors with the United States of America, the United Kingdom and the European Union topping the list of bilateral funders respectively.
Since 2018, Zimbabwe has been on an international economic re-engagement trajectory under the Transitional Stabilization Programme (TSP) from 2018 to 2020. The TSP was used as a way of showing Zimbabwe’s commitment to economic reforms in the eyes of international funding partners such as IMF, World Bank, African Development Bank, the United Kingdom, the United States, Sweden, Germany and Canada among other bilateral or multilateral potential partners.
Last year, the country launched the National Development Strategy (NDS-1) as a successor to the TSP, whose major pillars include engagement and re-engagement.